KIS Bridging Loans
Presented by KIS Finance
KIS Finance

Being accepted for a business loan has become much harder since the credit crunch as new business ventures are much riskier than buying a car or making home improvements, for example.

So, below are some factors that will help you in making your application more successful.


Have a business plan

Your business plan will be the key to being accepted for a business loan. You need to show you are well-organised, realistic, and have a clear direction for your business.

It is vital that you pay particular attention to your financial forecasts. This is what the bank will be most interested in so, they will want a very detailed plan of your expected cash flow. It may be worth having this looked over by an accountant first as they will make sure your figures add up, and will be able to point out any factors you may have overlooked.


Be clear on what the loan will be used for

It is important that you can demonstrate a clear direction for your business and can show exactly how the loan will be beneficial to you. Having a very clear, watertight business plan will help you with this as you will be able to show the bank how every penny will be spent and what returns you are expecting from this.

They will not be impressed if you say the loan is, for example, to pay for your own salary or to get the business through a quiet patch. Your loan is very likely to not be accepted if there is no clear way the investment will be returned.


Show how the loan will be repaid

The bank will need reassurance of how the loan will be repaid, so, they will want clear details of your cashflow and expected profit. To increase the chance of your application being accepted, this will need to show that your business is growing and expanding.

They will also be interested in what kind of experience you have in the field of your business, and the same of your management team/staff/business partners. Showing that you are willing to invest in training says that you are serious and in it for the long run. This will give them more confidence in the fact they are investing into people who are passionate and know what they’re doing, increasing the chance of a successful business that will make the repayments.


Reduce the risk, provide security

Business loans are profitable for banks, but very risky. The more of the risk you can take away, the better your chances of acceptance. You may be offered better rates too.

There are two ways you can do this:

The first is to put some of your own money into it (equity). This shows you are confident in the business plan and it lowers the risk for the bank as they are lending less to you.

The second way is to offer something as security (something that the bank can seize if you don’t make the repayments). This may be difficult if you have a new business without any assets, however, you may be able to offer personal security, such as your home.


Check your credit history

Even though a business loan is a separate to your own personal finances, the bank will still check yours and any business partners’ personal credit history and score to see what kind of borrower you are. If you have a low score, this is likely to affect whether your application will be accepted or not.

Check your score on all three credit reference agencies, Experian, Equifax and Callcredit. Make sure there are no mistakes and don’t do anything that may adversely affect your score, such as, defaulting on a payment.


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